welcome back, everybody. we want to thank our fantastic guest host today, arianna huffington. arianna, thank you so much for being here. >> thank you. this was so much fun. thank you. >> you're an entrepreneur and a capitalist, and all of your readers need to know that. >> and a compassionate human being. >> yes, you are. you're a great entrepreneur. >> we'll talk to you soon. good-bye, everybody. we'll see you tomorrow. ♪ it's got to be a morning of the ♪ and there is, it is the morning after the first presidential debate, and the big question is, will we see a romney bounce that could be a game changer in the race for the white house? good morning. welcome. i'm melissa lee along with carl quintanilla and jim cramer. david faber is at the economic summit in larue, texas. he'll join us from there in just a few minutes to kick off an exclusive interview with meg whitman. let's have a look at the futures this morning. we are seeing a positive bounce here. we are digesting, as we

mentioned, last night's debate as well as jobless claims which came in lower than expected. the previous week was revised slightly higher. we are, of course, looking ahead to the jobs report on friday. as for europe, the ecb, as expected, holding the course on rates. we are looking at these headlines crossing from mario dragi. we'll monitor those as to where he will stand and the ecb stand on future rate cuts. our road map starts in denver where president obama speaks this morning, trying to counter the widespread perception that he lost last night's debate. his in-rate contract down 7%, but do stocks have to start pricing in a romney rebound? >> the ecb standing pat on rates as expected as the pressure on spain to file for a bailout eases with borrowing costs a little lower this morning. markets looking ahead to tomorrow's jobs number and the start of earnings season next week. >> it's back. facebook hits the billion user milestone. 1 billion monthly active users as of september 14th. this as its ceo does the rounds, appearing on the cover of

"businessweek" and giving nbc an exclusive interview. we've got some of that exclusive later on in the show. and how bad can things get at hp? meg whitman knocks down guidance, sending shares down to nine-year lows. we'll talk to her directly in just a moment. the first presidential debate is now in the books. mitt romney went on the offensive, pushing his pro-growth agenda while taking president obama to task on his jobs and economic record. president arguing romney's plan on taxes and the deficit are the same types of ideas that caused the recession. here's what romney had to say about tackling the ballooning debt. >> i think it's not just an economic issue. i think it's a moral issue. i think it's frankly not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation. and they're going to be paying the interest and the principal ail their lives. and the amount of debt we're adding at a trillion a year is simply not moral. >> jim, that's a message that is

probably pretty effective to a middle-income voter in ohio or pennsylvania. but i know last night you were all about the things that were said about coal, things that were said about solar, and there were a million trades in there last night. >> at jim cramer on twitter, i try to come to play with what i can do, which is that if you wanted to know specific stocks to buy off this, of which by the way, there were many, if you felt that obama were to lose and romney to win, this is a gift for american electric power. it's a gift for southern. it's a gift for union pacific which transports cleaner coal. you could argue that its peabody. i don't want to go that bad because btu is a chinese play. and you would short the heck out of tesla because tesla was specifically -- of course, tesla motors' chairman comes out today and provides an update. i mean, first solar and tesla are just pure shorts in a romney administration. whoa! >> yeah. >> does the market at large have to reprice what they thought was

going to happen in 33 days? >> i think a lot of people are going to read stories about how romney was able to raise more money. i think politics is a money game. and i think it's an easier -- having done that at one point in my career, it's an easy call today to say, listen, you saw a guy, you know, kick some money in here. and instead of giving the money to a senate race, you give it to romney. >> take a look at the in-trade chart. throughout the debate, we saw that dropping in terms of chances for obama to be re-elected. i'm wondering, do you buy into the notion that perhaps stock futures are up this morning because it is perceived that romney did well in this debate? >> stock futures were up 7 1/2, at the top of the debate when it looked like he was really winning. at 4:00 a.m., they went back to 3 1/2. then spain did a fairly reasonable auction. >> auction, yeah. >> ecb. this debate had people transfixed for at least 27 to 35 minutes. in the stock market. then we were to, as always, which will spain survive?

>> as we said, tomorrow the data continues. we'll get a jobs number. earnings on tuesday with alcoa. the media loves a comeback. that's what they'll spit out today. things could be very different in 24 hours. >> and you did a great job, i'd have to tell you, that the horse race element of it has always intrigued me as someone in media, but if i were a betting person and there was a stock obama is supposed to in trade, then i would say, look. i'm not buying puts. >> you'd be neutral. you'd have a neutral rating? a market perform? >> i'm hold. yeah, i'm a strong hold. >> would you be a buyer of romney? >> no, no, i can't be a buyer. no, no. you know, i care about where stocks are going, not where they've come from. and i think that the next thing we'll hear is maybe unemployment will be interesting. i might change -- i'm not a buyer of romney, per se, because what happens is is that could be throwing good money after bad. i like to cut my losses and put

more money toward my winners. and i didn't hear anything last night that would make me trade as a portfolio manager any different as much as it might have been exciting. >> we're going to talk beyond coal and solar and energy a little later on. first, as you probably know, a grim outlook for hp sent shares down 13% yesterday. ceo meg whitman expects revenues and profits for the tech giant to decline in the near term saying unprecedented executive turnovers led to inconsistent strategic choices. our david faber is with meg whitman. david, good morning to you. >> reporter: thanks very much, carl. of course, well, you can certainly give them credit perhaps for transparency, hewle hewle hewlett-packard yesterday laying out a plan tofor remaking the company for next year they're calling a fix and rebuild year. as you said, the stock took a hit on that news. we are joined by the ceo of hewlett-packard, meg whitman joins us from headquarters in palo alto. as always, very much appreciate your willingness to come on in

what are seemingly very difficult times. you and i sat down a little more than a year ago when you first joined the company. and i guess my first question would simply be what took you so long? a year is quite a while in the history of a company, certainly one that seems to be in some distress. what took you so long to diagnose these problems and really lay out the vision for how you're going to try and fix them? >> well, you recall when i took over at hp, it was a company that had been through pretty turbulent times. i was the third ceo in three years. and it is a huge company, six major businesses, over 320,000 employees in 166 countries. and i needed to dive into each and every business, to understand each function. i needed to meet with customers and partners and employees to really take stock of the challenges that we face. so that's -- you know, yesterday, after a year's worth of work, i had peeled the onion and came out and told the investment community, here's our opportunities. here's the challenges, which present opportunities.

and here's the products that we're going to rebuild hp on. and we talked about our products in our server division, in our pc business, in our printing business and laid out the turnaround plan which i've said from the beginning was a four or five-year plan. >> reporter: you know, meg yesterday you also used the word "stabilization," referring to at least your job, you said, number one was to stabilize the company. looking at that stock price, it doesn't seem as though it's been stabilized. what gives you the confidence, and also you reported numbers yesterday that showed decreases in revenues in a couple of key areas. what gives you the confidence that you have stabilized hp? >> well, when i referred to stabilization when i first came to hp, i was talking about restoring confidence in our employee base, in our customer base because, of course, we had just announced that perhaps we were spinning our personal computer division that we justa shutting down web os. i just had to provide a steady hand on the tiller and reaffirm

the businesses we are in, that we're committed to the printing business, that the core of this company is a hardware company, server, storage and networking and then lay out the role of software and services in our overall portfolio. so i think we've done a good job of letting people know what businesses we're in, the path forward. now, from a stock price point of view, we have to deliver the results. and we have to deliver the products that are going to turn this company around. and now i think we've got 320,000 employees who understand what the challenges are. and as i've said, i would not bet against 320,000 hp employees when we get everyone marching in the same direction, you'd be amazed what this group of people can do. so i'm confident that 2013 will be the bottom of, you know, the turnaround. and then you can look forward, i think, to good growth in 2014 and 2015 as those products kick in, the investments that we're making in things like i.t., systems, in our sales organization, in training. those things will start to kick in. and i really do think 2014's

going to be quite a bright year for hp. >> you know, meg, there are some people out there who don't share your confidence when it comes to two key areas of the company. you mention them, of course, printing and pcs. they watched the movement to tablets amongst so many people, particularly the younger generation, and what they at least claim is a lack of printing on their part. instead of taking home documents, you take home your tablet, you don't print. what gives you the confidence that this can continue to be an important component of this company given these significant changes that are taking place in technology? >> yeah. well, first of all, i think the desire for people to compute, to create, to share, to communicate is actually not shrinking. it's growing. and so the personal computing devices, i think, are going to continue to grow. and, of course, you know, even the classic notebooks, our new thin and light notebook like the specter xt, we've had tremendous response to that. so we're going to have a full line of offerings from work

stations to desktops to notebooks. and then, of course, we're entering into the tablet category, too, but not as just a simple tablet, a convertible where you can have the benefits of a laptop plus the benefits of a pure tablet. and then one thing i'm very excited about is our elite pad which is the first tablet designed specifically for the enterprise. it has serviceability. it has what we call smart jackets that allow you to customize that tablet for your industry. when you put the smart jacket on, it goes from the ten-hour battery life that's built into the tablet to another ten hours of battery life in the smart jacket. so we're in that business, too, now. and i think we're going to do very well there. and then printing, you know, listen, commercial printing continues to go up. some secular trends in consumer, but we've got some new products coming in printing, too, as well. >> meg -- >> ms. whitman, i truly appreciate you coming on the show. i currently have been very critical of the company. i would like to know, in an

excellent interview, two days, maria bartiromo, with larry elson, ceo of oracle, he made it clear that this company was doing poorly until mark hurd came in. then when he left, the company was finished. what do you think of mr. ellison's analysis? >> listen, you know, there's been a lot of change at the top of hp, a lot of acquisitions over the years. you know, one thing people don't really recognize is over the last ten years we've gone from a printing company to a ge diversified technology company. today 43% of our profits come from our server, storage and networking and the services business that goes along with it. so listen, we've got a great set of assets here. we understand the problems. and we're about fixing them. and i think it's a great opportunity. you know, these are -- i believe this is all very fixable. it's going to take time. there are no silver bullets. it's basic blocking and tackling. we know how. now we've got a road map and we're going to go do it. >> ms. whitman, what do you say about the next generation?

the next generation wants apple. i don't see people begging for hp pcs, i'm waiting for the tablet. i also noticed microsoft is going against you. you're supposed to be a good customer of them. what do you say to the next generation who says listen, you know what? forget apple. steve jobs, he's gone, it doesn't matter, stick with hewlett! >> listen, we ship two pcs every second. this is an enormous business. we're seeing growth in a lot of areas. we have an entirely new design lineup. we have put real emphasis on design. and this is something hp does quite well. we have terrific product engineering. now married with a design organization. i think we've got a really good shot here, and we've gotten great response to these devices. you know, listen. we are one competitive company. we now have a sharp competitive focus. we know what we have to do to compete. and we're going to do it. i wouldn't bet against us. i wouldn't bet against the technology that this company has in the pipeline and our commitment to delivering great products and to meeting customer needs.

one thing i'll tell you about hp. through all the change at the top, through all the craziness, our people have delivered for customers. we will do anything for customers. and i think that's a great strength of the company that we're going to build on. >> meg, you acknowledge that perhaps from an investor standpoint, there may be a dozen of reasons not to invest in hp. the payoff is in line with global gdp, and also you took down your free cash flow estimates currently. so it doesn't seem for investors -- give us the reason why investors should be investing in hp and not some of the competitors that jim had mentioned, which see brighter growth prospects immediately. >> so, you know, i can't give advice to our investors. they'd have to make their own decisions. here's what i see at hp. i see an incredible company with a lot of strengths that's had some pretty hard times, that has some headwinds from the macro economic environment, some big

market changes, but you have a management team now who has a handle on the problems, who knows what to do. we've got a plan to fix this company. and i think investors have to decide, gee, do they think that hp can turn this ship around? do they believe in the management team? do they believe in our employees? do they believe that customers want hp to win, which i can tell you they do. and do they believe in the product lineup? we spent quite a bit of time yesterday at our analysts day talking about the coming products in each of our divisions. we showed our new pc lineup. we showed -- talked about our multifunction printers. we talked about ink in the office, ink advantage. we talked about our new, very energy efficient arm-based servers that i think could revolutionize the server market. we talked about three par and storage as well as we're the leader, really, now in the development of sdm, software-defined networking. so products are going to be a really important part of how we bring hp back. and investors got to look at that whole story and say, gee,

do i think this is something that over the couple years i can make a lot of money on? >> meg, you talk so much about -- it's carl, by the way -- you talk so much about change in the company. one complaint investors continue to lodge, though, is that there has not been large-scale change on the board which for a long time was the cause of a lot of uncertainty and skepticism regarding the company. do you believe the character of the board has changed? and if so, how given that the players -- there hasn't been a turnover on a large scale. >> so there has been turnover on a large scale on our board. when ray lane came in as chairman in january of 2011, since that time, half the board is new. and half the board has left. so we have 10 or 11 members of the board. half of them are new. and they are terrific individuals in their own right. many of whom have run large companies, who deeply understand technology. so i'm very comfortable with the makeup of our board today. it has been a wholesale change in the last year and a half.

>> meg, it's david back in larue, texas, where of course i am. you are heading into this fix and rebuild year with what you claim was a worsening macroeconomic environment. europe is very slow. you noted china is slow. does that give you pause given you are, again, heading into a very important year for this company? >> it does. and it's part of, you know, that understanding of the macroeconomic environment. did influence our guidance for 2013. it's very much a factor that, you know, is on my mind. we have a big exposure to europe. some of the markets in europe are our strongest markets. we have very big shares. and so we had to take that into account as we gave guidance for 2013. so we took into account the macroeconomic environment, the market changes that are under way, the challenges we have internally, and the products that we're bringing to market and, said, you know, what do we think is a reasonable achievable goal that will allow us to make

the investments that will set this company up for a great 2014 and beyond. >> meg, is hp simply too big still? you mentioned during this interview, 320,000 employees. it's almost amazing to think a company with less than a $30 billion market, of course, you have a huge revenue line as well. you have 2100 different skews of laser printers. is the scale simply large for you to manage and for it to succeed? >> i don't think so. you know, i have now spent, as i said, a year at this company. i believe that every single operating division of this company plays a role. and customers really believe that we have a unique role to play in supplying them with technology. we are the only company that can go from the desktop to the data center, from hardware to software, to solutions to services. and i'll tell you an interesting story. remember last year when we said we were thinking about spinning off the pc business? and the customers came out and said no, we want hp together.

we think you are stronger together. they were quite unsettled by the fact that we might spin off part of this company. so my belief is we are better together. if we can make each of these business units function beautifully on their own right and then link it together in offerings like converge cloud, security, the ability to combine our software and our, you know, server storage and network business in unique ways, i think we bring something very needed in the marketplace, and customers tell me that every single day. >> you ever have any second thoughts about taking the job, meg? >> no, i don't. i come in every morning -- this is a great time to be in technology, a great time to be at a company like hewlett-packard. listen, we've got a lot of work to do, but we know what to do. and the thing that, you know, i get joy out of every single day is our employees. this is one great group of people. and i think with clear direction, with a great product lineup, with the investments that we're making in systems and

technology to make it easier to work at hp, i think we're unstoppable. we've got a lot of work ahead. 2013 is going to be a tough year. but i feel good about the plan we've laid out, the prungts we have -- the products we have in the pipeline and the customers who want hp to win. >> reporter: as always, we appreciate your willingness to update us, meg whitman. when we come back, facebook topping 1 billion users. we'll hear what mark zuckerberg has to say in an nbc exclusive interview. plus reaction from both obama's and romney's camps. taking a look at futures, we are looking at a higher open across the board. much more "squawk on the street" straight ahead. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.

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session, first look at "the mad dash" with jim. got to wade through a lot of retail numbers this morning. >> you would have thought -- this is a big month because you have back to school. the only thing that was noteworthy was how bad kohl's did. you're talking minus 2.7 versus .1%. i keep thinking these guys are going to turn. it's just not happening. >> you had a month where gas prices were in fluctuation, right? >> yes. this is one of those months that frankly, i would have expected someone to pop to the upside. but as i go over every one, i don't see anyone really doing anything that shocked me. usually there's one guy that's in that really kind of blew it out. no. but this was the disappointment. i am wearing my kohl's socks, but it is not in honor of this number. i just happen to like them. >> okay. we'll talk some of the other winners and losers when we come back. wall street, main street buzzing about the debate. we'll talk about that and we'll get the opening bell in just a moment.

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the markets are truly sandwiched between politics and the economy. the debate last night, a lot of data today and tomorrow including the jobs number. and the opening bell. the s&p 500 at the top of your screen over the big board, steelcase, maker of business furniture. you might be sitting on some right now, celebrating its 100th anniversary over at the nasdaq. net element international, a mobile commerce and payment processing company celebrating its ipo today. and jim, there have been several of those, although, as we saw from lifelock, not all of them going the way the companies had wished. >> no, it's interesting, this company that's becoming public, it is a terrific household name. they make a lot of plastics that we all use, hard plastics is really their major initiative. plastic uses a lot of natural gas, which means that the margins should be going up. nobody cares. >> yeah, it priced below the range. bery is the ticker. it debuts here on the stock exchange.

meantime, hewlett-packard, hitting another new low, down 1.5%. we didn't get a chance to really dissect ms. whitman's interview. what did you think? >> 320,000 employees, david cuts right to the matter. maybe there should be 220,000 employees. obviously, there were no questions that were substantively answered. that's okay. romney doesn't answer substantive questions. obama doesn't answer substantive questions. whitman doesn't answer substantive questions. i get that. three politicians, three answers that you don't really get to challenge them. >> the difference is we see the impact immediately, like now. like down 1.5%. i mean, investors don't have a reason to be in. she sort of admitted it, you know, if you think that hewlett-packard is going to be okay in three years, then that's where you want to be. two to three years, we don't know where we'll be in two to three years. >> i thought it was a bit of a kodak moment, frankly. >> really? because that's a loaded -- >> that's damning. >> a lot of people would say

that's a loaded comment. >> i've been telling people to sell this thing nine ways to sunday ever since hurd left. she didn't slight hurd like in the maria interview. i will come back and say i always like to have a reason to own a stock. it's always central. those three i mentioned, obama, romney and whitman, of those, only whitman is a ceo. i find when i listen to her, i realize that steve jobs was very right when he told walter isaacson that hewlett and packard, what a disaster. what's left of that company that those two great men built is nothing. >> the problem for a lot of investors who hung on to hewlett-packard saying there's value in this company and the valuation looks good, the dividend yield at 3.5% or so looks good. the free cash flow estimate went down. the dividend is still there. and with this guidance, we basically know that things are going to be worse until at least

2013. so what is the near-term reason to be an investor in this stock? >> bunch. >> for 2016. you want to buy it now for the payoff in 2016? >> burrows, univac, ncr, controlled data and honeywell. honeywell found its way out of the wilderness by becoming a different company. controlled data became ceridian, and cr became a cash register company again, chose to get out of hardware. she needs to get out of hardware. all those companies that survived got out of hardware. >> every remark she made reinforced their commitment to hardware, jim. >> new hardware products. >> that was the sole argument. >> i'd rather own bla black & decker. it's a very good hardware company. this was really, again, in keeping what i've come to expect of hewlett-packard which is you're not going to find a reason to buy it from me. you'll have to find it from others. your question about shareholders, what was her answer to that? you tweeted it.

>> it's not my job -- investors will make their own decisions. >> you're on your own, pal. >> she's got to make the case. you've got to make the case, meg. you've got to make the case to investors. the stock right now we should note before we move on down 3.5%. >> let's contrast this with ellison, the interview with maria bartiromo. i don't see the stock, but i'm listening to ellison and maria and i'm thinking maybe i'm underestimating this guy. i didn't feel i was underestimating meg whitman. >> facebook shares up 1%. there's some color as to where these monthly active users were connected from. interesting countries. actually, this is alphabetical order, they point out. brazil, india, indonesia, mexico and u.s. and as of that week, they have 600 million mobile users. and apparently that's what he emphasized in his exclusive with nbc. >> this is a stock, unlike ms.

whitman's stock, where every time someone speaks from facebook, whether it be sherrill, he comes on the "today" show and he gives it a bump. this guy makes a case for anytime anyone's on facebook, they're basically saying listen, forget the past. we've got a mobile strategy which i think august was good for them. i'm getting a feeling that september was good. i think their ability to go out and tell the story ahead of the lockup is a little dicey because you've got this big lockup expiration. >> sure. >> but i do marvel about 1 billion users, and i do think that, you know, i don't want to necessarily buy oxygen because there's, what, 7 billion users of oxygen, but this company does have -- >> interesting that facebook's argument pivots around the number of people who use their product. whitman's argument centers around the number of people who create and work at the company. right? as if a large employee base is a good thing. >> chinese eighth army. that's how mao fell. >> interesting.

>> look at kohl's stocks quickly. we got a pop, perhaps off the debate. kol is up 1.25%. you look at individual names, consol energy, largely in nat gas and coal play, largely domestic play here. that is up by 2.7%. so we are seeing the impact. >> the pt barnum theory always comes into play. a sucker born every minute. you buy these stocks, there is literally no earnings momentum. coal production in china is down because they don't need as much. hope springs eternal. and romney speaks and he's talking about the oil companies, and they ought to be able to drill everywhere. of course, the actual best oil is on private land. we always like to make that public land thing because it's something to talk about. you could buy the oils off this. again, i think that's a big mistake. if you wanted to play it, the best way is is that he goes

defense. northrop grumman. remember that private jet thing? i was waiting for him to hit vegas. and the gangstas. but you had general dynamics. this is a fulcrum stock. you want to sell it if it's obama, buy it if it's romney. >> again, this is one priced below the low end of the range by 50 cents. and it's trading lower right now at the open by 4%. let's check in with bob pisani here on the floor with more of what is moving this morning. bob. >> reporter: so are we getting a romney bounce for stocks this morning? look, i think everybody agrees, governor romney did very well, better than some people thought. you noticed europe. this is what i watch every morning, get up, 3:00, look at how europe's going to open. and normally europe opens strong. we open strong. but this morning europe has been meandering. not a lot of trends earlier on. but our market was up overnight. nicely. and some people are attributing this to a potential romney -- potential romney strong showing. a lot of people feel that the

stock market might be better under governor romney. elsewhere, i want to talk about health care stocks because here's the flip side of this. remember, there has been a sort of health care on trade. let's just call it that. ever since the democratic convention, the end of august, under certain assumptions that perhaps president obama would be the odds-on favorite, so-called obamacare would be in. and of course, we've seen the xlv, that's the etf to watch. it's the health care etf. historic highs. it's moved up 5% or 6% since the end of august going into the democratic convention. that's your health care on play. obama care on play, whatever you want to call it. and a lot of people this morning are saying how strong is that play necessarily given that governor romney did very well? it's interesting today. you look at while the index itself i think is up as well, hospital stocks, tenet health care, for example, is to the down side. hca to the down side. there were option bets made. bearish option bets yesterday still following through on the

stock there. i think that's something just to pay attention to because that's the one second they are morning that's getting a lot of discussions. how about retail sales? just want to change the summing a little bit. all right. september retail sales were not as great as august, but august was a real outlier, astonishingly good. right now 3.9%. sales increase for september. that's according to retail metrics. that's a pretty good number. 55% beat. that's a little bit below the historic numbers, about 62% normally beat. but still, august, over 80% beat. so bottom line here is this is still a respectable number. apparel did well. gap had a very good number. ross stores and tjx did well. department stores were soft. macy's, nordstrom, kohl's was negative, a disadisappointment. target has announced they will no longer do monthly sales as of february. you know what's left? there are only 19 retailers out of 120 that now report monthly

numbers. that's 15% of the total. it's getting harder and harder, guys, now to talk about these retail sales numbers as representative of some kind of trend when you only have 15% of the total reporting. jim, back to you. >> when you get off the desk with retailers, i have a lot of retailers on "mad money," they always say i've got to get away from monthly numbers and i don't exist to be able to please hedge funds or get people to short me off the number. great insight. i know target, tired of playing the hedge fund game. let's head to the bond pits, rick santelli is atment cme group in chicago. go ahead, rick. >> reporter: thank you. thank mario dragi because from where i sit, it looks as though much of the movement in the marketplace that i observe, fixed income and currencies, is really due to what's going on with the ecb press conference. and to that point, look at the 24-hour chart of the euro, okay? now, if you were like me and you see it on the screen, but hold it here like traders do. then look at the second chart.

ten-year boon yields. put that chart next to it. the third chart is our ten-year. you put them all together and look up at the light and lo and behold, there's one chart. they're basically all exactly the same. so we see that our markets are affected greatly by the notion that mario dragi once again is trying to use that cannon, or that bazooka, whatever you want to call it. the difference is this time the conditionality is apparent because he has no fuse right now. whether he gets the fuse and lights the fuse, i'm not making a judgment on that. it seems though the market is still buying into the fact that he is going to fire that or spain is going to request a bailout. so it's having an effect. the real issue is how long will it last? now, we're going to take our shoes off and get comfortable and go to the barefoot economics summit with david faber. >> thanks very much, rick santelli. i am here in larue, texas, joined by a very thoughtful and successful hedge fund manager, john burbank, who runs passport capital. perhaps not the easiest time to

be an investor, john, particularly when you believe there is a lack of growth that is not yet reflected in equity prices. i'm looking at your second quarter letter in which you simply say despite an equity market which in our view is ignoring the facts of the world, you're still holding a short position, perhaps not as great as it was in the second quarter. when is that going to change? >> yeah, so markets sold off for about six weeks in april and all of may. and then bounced -- bounced for four months in a row. meanwhile, growth continues to plummet around the world and in the united states. and ecri which we subscribe to and believe it is in our session right now. >> which they have been for a while, to be fair. >> they have. they have a good record on that. >> do you think we're in a recession? >> i do. i don't think all parts of the united states are. but i think we're incredibly close to that. i think the numbers are not actually accurate that the government projects there.

but the last four months was remarkable because usually equities and growth, you know, merge together. sometimes equities anticipates it. sometimes it lags. but growth numbers keep falling. and yet the equity market keeps rising. i think the s&p is now -- should be thought of as a different sort of class of instrument used by investors around the world. i think now that the yield of the ten-year or of corporate credit, i think it hasn't been this tight since the '50s. and i think therefore if you look at it on a yield basis and if you believe that multinationals, leading multinational companies will have enough growth to have growth, and i think that's actually true, because global growth, from a consumer standpoint and spending is going to be positive, then in a way these equities are mispriced relative to, you know, the ten-year. >> so you're talking about the idea which we've seen in force,

buying these larger stocks that have significant dividend yields, you think that's creating a new dynamic, though? >> yes, yes, i do. i think we've seen that the fed and the ecb are willing to go beyond the mandates that we associated with them. and the independents of the fed and now there are full attention to unemployment which, in my opinion, they will be unable to target or meet means they can deploy much greater tools of liquidity than they have which would have a direct impact on all asset prices. basically driving everything up higher. >> so what do you do, then? sitting there as a hedge fund manager, who has a viewpoint not particularly positive, even here in the united states you think we may be in a recession. do you go out and short? >> right. so my view is that after '08,

all that government spending and central bank liquidity tried to push things back together and push everything up higher. and for '09 and 2010 and the first half of '11, everything traded in line together. germany traded like spain. and then i think the second time around for europe, last year things started separating. the most dividend-paying stocks, the s&p, i think, were up 1,000 basis points over the least dividend paying stocks. i think you're seeing a separation now and a recognition that we're not going to have the growth that we thought. so i actually think -- i call it the great separation. i think what's happening is that the really high-quality, well-managed, well-governed, dividend-paying companies are going to be treated as an asset class that's priced off of these other available yield instruments while speculative companies, things that, you know, really need the economy to do well, things that aren't that well managed, that don't pay dividends, et cetera, are going to stay poor.

so i think -- so basically would be long high quality, leading companies which generally in the united states and then short speculative companies which obviously rise into fed announcements and, you know, in times when the market's up but then fall away. so it's a good time to be long and short certain things, but you've got to get it right. >> reporter: you've always got to get it right. john, i want you to stay there. i'm like jon stewart on "the daily show." we're going to send this to the web, but we're tight on time, so melissa, i'm going to send it back to you. how do you fire up the wall street bull? cramer has a plan for a higher stock market. you'll want to hear it. also, arne sorenson, stay tuned for an interview with him.

these markets can be just as unpredictable as the weather. so this month, don't get caught in the rain without being prepared. and one way to do that? carry an umbrella. now is your chance to win a stylish cnbc one. signed by the "squawk on the street" gang. if you can guess friday's nonforeign jobs number, it's all yours. tweet your guess to our new twitter handle, @squawkstreet and don't forget the hash tag #nailthenumber. for all the rules, go to sots.cnbc.com. you have until 8:29 this friday morning. good luck. at optionsxpress we're all about options trading.

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chair ben bernanke to give liberty, justice and higher stock prices for all. now, that's a platform i can vote for, if only obama or romney would embrace it. >> or if cramer would run for office. that's always another possibility. >> no. i've got -- maybe a whole mortuary of skeletons in the closet. >> on those same points, jim, do they skew more romneyesque than obamaesque? >> i think that not necessarily. to put him down as attorney general, i think that would be more of a democrat call. neutral call. let's put it that way. natural gas could have been neutral. surface fuels as a replacement for oil, romney doesn't talk about that so much. maybe he believes in that. but the president believes in all forms of energy. the thing that is such a natural is that tim geithner, i think, would be a guy who would issue $500 billion in 30 year. i don't think romney's people would because romney's saying point blank we've got to cut the

deficit. i think geithner's always been much more feisty about how to issue bonds. >> you clearly would reappoint bernanke. i leave the steve jobs memorial competitiveness czar. >> he did call obama and say listen, we need 30,000 more engineers. that's important. bernanke, more of a chance to be reappointed under obama. romney's always said he'd fire him nine ways to sunday. these are not necessarily anything that i think would stick to one or the other. the dividend thing is i'm trying to get people to own stocks, not to trade them. a buyback, anything that involving capital gains, watch why you sell, not why you buy. >> absolutely. the bears, of course, took a big swipe at oil yesterday, but this morning crude is on the rebound. we're going to explore whether or not oil has bottomed out and where global slowdown fears fit in. but first -- ♪ >> coming up, market volatility hurting your head? >> he's got a headache. >> no, i don't. >> how about now?

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let's get to simon hobbs and see what's coming up. >> good morning, krarlcarl. the ceo of car max will be weighing in on the presidential debate last night. we'll look at same-store sales. kohl's taking it on the chin today in the wake of their falls in sales. and also matt lauer on the "today" show this morning asked mark zuckerberg a very simple question, why around you killing it financially? we'll talk about facebook and play that footage. back to you guys. >> even used the words "killing it." thanks. time for "6 in 60." we'll begin with ryder system upgrade. >> crucial trapt. we need this one higher. i like it. >> holey frontier downgraded at ubs. >> i think it's nuts. we have a big glut of oil. they're a win. >> you had eric wiseman on "mad" last night. >> he's saying, look, christmas shopping is going to be good,

great. >> fedex, rbc, cautious. >> i'm a buyer, not a seller. >> cowan like safeway. >> good luck with that. i think this is a whole foods moment. >> and target's raised to bear. >> this is one of the greatest untold stories. this is about a drug that you inject in your eye once a month rather than once a week. boy, i would like that versus the once-a-week formula. >> what about tonight? >> enbridge, talk about a romney name, wants to put pipelines everywhere. upgraded today by ubs. very controversial. the environmentalists hate this company. >> i like the term you used, the full fulcrum stocks. coming up, tackling both candidates' comments on their stances on tax. also ahead, an exclusive with marriott ceo arne sorenson on their earnings. keep it right here. and the world's only tridion safety cell which can withstand over three and a half tons.

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with the blackish-blue frame and the white dots and the splattered paint pattern, your lights are on. what? [ male announcer ] the endlessly customizable 2013 smart. welcome back to "squawk on the street." august factory orders just hitting the wires. 5.2 -- down 5.2. now, granted, that doesn't look like a good number. well, it isn't. but it's actually a little bit better than we were looking for. we were looking for a bit of a

bigger negative. and last month's positive number was downgraded just a bit but still remained positive. you know, kind of a mixed bag there. if you're a rate of change person, obviously going from a positive month in july to a negative month in august doesn't really send a great message. but this number isn't moving the market large. the market continues to be pretty much mono vision to much of the press conference and aftermath of the ecb maybe to a lesser extent the bank of england, but really trying to monitor what's going on. i tell all viewers and listeners today is get a chart of the euro currency and hold it up against ten-year rates, hold it up against the u.s. markets and you'll see the correlations and the leadership came from the other side of the pond. back to you. >> thank you very much, rick santelli. let's take a quick check on the markets. not too much reaction to the factory orders number. we're holding in with the dow up 36 points, the s&p up 5, the nasdaq up by just about 0.25%.

hewlett down by 3.5%. financials, though, on the strong side, up by 0.9%. >> you see staples at an all-time high as well. >> yes. let's get the road map for the next hour. the first presidential debate officially in the books. widespread perception across the street that the president lost the battle in denver. his in-trade contract sitting down over 7% this morning. we'll have your official obama campaign response with the co-founder and former ceo of car max next. and facebook marking a milestone, officially reaching 1 billion monthly active users. hear what facebook ceo mark zuckerberg has to say about leveraging that milestone in an nbc exclusive. u.s. retailers coming in solid, eased up on big spending ahead of the holiday season. we'll sort through the numbers and give you the look ahead to the holidays. first, the first presidential debate, as we said, now in the books. romney and obama facing off last night in their first presidential debate. among the topics they sparred over, revenue. take a listen.

>> there has to be revenue in addition to cuts. now, governor romney has ruled out revenue. he's ruled out revenue. >> absolutely. look, the revenue i get is by more people working, getting higher pay, paying more taxes. that's how we get growth and how we balance the budget. but the idea of taxing people more, putting more people out of work, you'll never get there. >> for reaction from the obama campaign, the co-founder and former ceo of car max, austin leggen joins us from richmond, virginia. austin, good morning to you. >> good morning. how are you? >> good. i'd love to get your take on that specific moment which has been cited by many to be one of romney's most coherent, concise arguments for his view of the role of government. you agree? >> well, it may have been quick and a good sound bite, but it's not very coherent or concise. what he says is growth will give you revenue which will give you growth. i mean, what he's saying is i'll grow the economy, and that will

produce the revenue. and that will give you more growth. the reality is, his proposals which are to cut are recessionary. they'll drive the economy the wrong way. and when it came to closing loopholes, the only loophole he was willing to talk about, i wish he had talked about closing the kerry loophole. that would have been an interesting one. that's a big inexcusable one. but instead he said he'd get rid of big bird. as we all know, that's not going to do it. he's just not honest on either the tax side or the revenue side. but, look. i used to work at boston consulting group, too. mitt is a great presenter, and he made a good presentation last night. >> and i assume you have thoughts on -- and i don't want to get too much into the style because that is all anyone's talking about today. but you must have some explanation for why the president appeared the way he did and why he chose to leave out some bullet points that he could have pulled out of his pocket. >> sure, look. i think the president focused on the facts and focused on his

accomplishments and his plans for the future. and he was very factual in what he did. and as many people have said, when you're the attacker and you don't have a program of your own or a set of accomplishments of your own, it makes it a lot easier, and that's what mitt romney focused on. you know, i'm not the president's speech strategist, but i am a guy who focuses on facts. and i think fundamentally when you clear away what happened last night, the facts haven't changed, which is that the romney plan in terms of its financial plan, the numbers just don't add up. there's no place to get the revenue that you need. and one of the things that soured me a bit on republicans in general is they always talk fiscal conservatism, but no republican since ronald reagan has submitted -- i mean since richard nixon has submitted a balanced budget. so you know that it won't work, and i think it's the facts and the substance that matter. >> austin, you're the former ceo

of car max. in this period in which it is so clear that these two candidates are running neck to neck, and that's what the debate highlighted, is we're watching every moment to see who's going to pull forward. would this have cast a shade of uncertainty over what you do as a ceo? would you be waiting until the elections were done in order to make any big decisions? >> i don't think so. look, i started at car max -- we started car max when george w. bush was president and george h.w. bush, then bill clinton, then george w. bush, then barack obama. the fundamental decisions that businesses make particularly domestic businesses are driven really by what's going on with the consumer. and i think the only thing that would worry me is if i really believed that romney and ryan were going to get elected and they were going to come in and dramatically cut government spending, that would lead to a recession, and that would worry me.

but i don't think they're going to get elected, but more importantly, i don't think they would do that if they did get elected. nears no republican that ever has. i think ceos are focused on what the consumer is doing, what are their customers doing. and as jim cramer said a little earlier, i think between 23 and 27 minutes of the world's focus was on this last night. the people have moved on to more substantive topics now. >> so the bottom line is that it does not matter for a domestic business who gets elected? when it comes to the fundamental -- >> i think it does matter, but i think it matters because i think barack obama is the person who is most likely to be able to continue growing the economy. and the things that romney has proposed are unlikely to be successful. but i don't think ceos react to something like a debate. you know, they're looking at the longer term. >> right. although you could say something else about undecided voters in ohio and pennsylvania and

virginia who were watching, 60 million people, we think, austin. you believe romney won last night, i'm assuming. >> well, look, the polls say that on style, romney won. i think on factual, if you're a fact-focused person and you really cut through to those, i think president obama had the better end. i think his best statement was at the end where he said, look, you've told us how you're going to -- you've got a great financial plan. you've got a plan to reform wall street. and you've got a plan to replace obama care, but you haven't told us any details. and as i said, the one detail we got was he'll cut big bird. i think if you're factually oriented and you take that approach, it won't have helped him a lot. but, you know, what the insta poll last night said the instant reaction was in his favor. >> some might argue that you could say the same thing about the president, that his plan for the next four years was not clearly spelled out. i mean, i worked last night during the debate and watched the president try to defend obamacare in 30 seconds.

you would have thought after two years, you'd be able to do that concisely. he did not do it well. >> yeah, look. i would say that defending the most complicated piece of legislation we've ever passed in 30 seconds is difficult because it's very difficult to explain. i started life as a health economist 30 years ago. and i can tell you fixing medical care and medical care costs is a long-term problem. and one of the things romney kept harping on last night was essentially cutting money out of medicare which we all know, in essence, is, in fact, reducing costs. and the only way we're ever going to solve our fiscal problems is reducing our health care costs. that is the key focus. so, you know, i think it's very difficult to articulate that in a sound bite. >> yeah. if you can survive being a health economist, you can survive about anything. austin, appreciate your time. >> that's the business. >> austin ligon, thanks so much.

let's go to mary thompson. >> we're looking at nuvasive, trading very active, ten times normal volume for the stock. the reason being the company cut its forecasts for third quarter revenue. now seeing revenue of 147 billion. the reason, the company says delays and more denials from insurance companies. take a look at that stock, off 33%. a number of analysts cutting ratings for nuvasive as well. back to you. straight ahead, the nbc exclusive interview with mark zuckerbe zuckerberg. 1 billion users and their mobile devices. and marriott's stock is having a great day today. earnings beating expectations on revitalized room demand. the ceo of marriott will join us exclusively. these markets can be just as unpredictable as the weather. so this month, don't get caught

in the rain without being prepared. and one way to do that, carry an umbrella. now is your chance to win a stylish cnbc one, signed by the "squawk on the street" gang. if you can guess friday's nonforeign jobs number, it's all yours. tweet your guess to @squawkstreet wit with #nailthenumber. go to sots.cnbc.com. you have until 8:29 this friday morning. good luck.

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to the scale we need to be a global company. with a little luck green toys could be the next great american brand. find what's next for your business at chase.com/mainstreet want to take a quick check on the markets. gaining steam, the dow is higher by about 89 points in spite of hewlett-packard's 3.5% decline. the s&p 500 and the nasdaq being helped by a slight turnaround in shares of google and apple. google one to watch. 765.21, close to its all-time high, close to 766. so that's one we'll be watching closely in today's session. meantime, our own david faber sitting down with hp's ceo meg whitman a moment ago. the stock opening at another 9 1/2-year low today. david asked meg a specific question regarding the size of the company. take a listen. >> i believe that every single operating division of this company plays a role.

and customers really believe that we have a unique role to play in supplying them with technology. we are the only company that can go from the desktop to the data center, from hardware to software to solutions to services. if we can make each of these business units function beautifully on their own right and then link it together in offerings like converge cloud, security, the ability to combine our software and our, you know, server storage and network business in unique ways, i think we bring something very needed in the marketplace. >> want to bring david in for more reaction. david, you saiarliou've got to give them transit for transparency. yesterday you might add consistency today. >> reporter: yeah, she's sticking with the message. and of course, they will be. you know, it's a fix-and-rebuild year, 2013, carl, but the market is certainly running in fear at least as of yesterday and today. let's not forget, i think there had been an anticipation that $4 a share non-gap number they were

pointing to for 2012 would be a bottom. clearly that wasn't the case. not that meg said it was, but it was an understanding amongst investors. there are a lot of challenges. we asked that question in terms of the simple size of the company. carl, as you well know, they've had so many different leaders, moved in so many different directions, had so many transitions. the enterprise services business, for example, has had four different ceos in a short amount of time, and that's a key problem area for them. one wonders whether they're simply going to be able to, as part of this new plan she's put together, really be able to execute, and that's the key question. >> that is true. and david, it's shocking to see the stock trading so sharply lower this morning. and carl, you had mentioned a note from bmo this morning, cutting its price target down to $5 a share. she didn't seem to give any when it came to the question about investors and feeling the pressure from investors, but i'm wondering if you ever got the chance to talk to her afterwards about the pressure she may be feeling at this point.

>> reporter: you know, i think, listen, the stock is down 34% as of yesterday. so 37% since she took over. meg is very much aware of these new targets. i will tell you that. putting them out there for next year as sort of the bar being lowered significantly, melissa, if they disappoint on that, i think she knows that she will have lost any confidence that still remains or that she can win back over this next year. that's a key. now, she did mention during our interview as well, part of those lowered targets are a result of a very difficult macroeconomic environment. but yeah, they are well aware that they -- you know, as part of the things they need to do, they've got to deliver on their financial goals. in fact, in conversations we've had in the past, that has been a key thing, meet or beat financial guidance, and then also, obviously, succeed in terms of those product introductions that will be so important for the company as it moves towards what it hopes will be a growth year again starting

in let's call it 2014. >> all right. david, great interview there. we'll check in with you a little built later on in the show. some big news out of facebook this morning. the social network giant officially reaching the 1 billion monthly active user mark today and launching a new ad campaign to go along with this milestone. facebook ceo mark zuckerberg sat down with matt lauer in an nbc exclusive. take a listen. >> if a company has 1 billion customers, how can they not be killing it making money? >> well, i think it depends on your definition of killing it. we are making billions of dollars. and we're a public company now so i can talk about that. but the future is really going to be about mobile. and the opportunities for growth there. >> have you been slow to get there? are you playing catch up in the mobile area? >> we do have the most used mobile apps. there's 5 billion people in the porld who have phones. we should be able to serve many more people and grow the user base there. >> joined now by daniel earns

and our own julia boorstin. the stock is it up 0.9%, hitting 1 billion monthly active users. is that, in fact, much of a milestone? >> i would make a few points. first, we were actually modeling 1 billion in the quarter. they're actually a couple days late in that. the number's up about 25% year over year. and on a billion basis, that's pretty strong. i point out apple, on their last number on itunes accounts, was over 400 million, which is up about 85% year over year. and they're doing a lot more revenue, you know, peruser at apple than they do at facebook. i think billion is a big number. i don't see how, as matt said, you know, they don't kill it on the revenue basis with that. but i think the more interesting things coming out of facebook lately is one, the pr blitz. first it came on aol tech crunch, then sherrill was on with julia, and mark is on with

nbc and matt lauer tonight or today. so i think that that, plus they're doing a commercial. it's hard for me to imagine, as an analyst, sitting in front of my model looking at what they're going to report in the quarter that business is not doing reasonably well, that they're out there in this massive kind of pr blitz talking to investors and talking to the street. >> hold on a minute. is it actually a massive pr blitz? this is the ceo of a very public company with a massive market capitalization who's chosen to do a couple of soft interviews. he's not exactly putting himself through the business press, is he? i mean, this is a pr blitz of sorts, yeah, but not the kind of way you may take it. >> i look at it on a relative basis. it hasn't had a lot of opportunities. but also look at steve jobs. how many times did that guy go on tv and talk about his company? >> i think we could point out that they are doing a pr blitz to get the message out that their ads work. sheryl sandberg came on to talk to me, and they also had a

number of different facebook execs talking publicly at advertising week, which is going on in new york this week. david fisher was on a panel that i moderated yesterday. brad smallwood who oversees all of facebook's metrics, sort of the measurement data about how well facebook ads work. he released new numbers on monday about the effectiveness of their products. so it seems like after being very, very quiet for many months, ever since the ipo, facebook is now really getting out there. and they're on the offensive now. they're trying to control the message about how their ads work and how many ads they're putting out there. simon, what i think the big difference is is this is just a massive about-face from the quiet period they seemed to be in post-ipo. >> well, yes, i think that was perhaps inevitable. what about the way in which they're trying to change their ability to monetize what's going on, specifically the promoted posts which a lot has been written about in the last 24 hours which they're going to bring to the united states, $7, say, to have your message put above others on the news feed.

do you see that as a danger moving forward that it perhaps changes the nature of facebook, or are they socializing, if you like, the ability of individuals to pay money in a way that isn't happening with the big corporations, julia? >> i actually think that that announcement won't yield much revenue. i think what they're doing by allowing individuals to pay to promote their posts is they're just treating individuals the way they treat businesses. if i'm having a yard sale and i want to promote that, i could pay 7 bucks to make sure that my friends see that post, maybe if someone who's a baby-sitter who wants to offer her services would pay to promote that. but the number that i think is actually really interesting here, simon, that i would direct you back to, in addition to the 1 billion number, facebook announced that they have 600 million mobile users. that's up from about 550 million just a couple of months ago. and that means that mobile is actually growing much faster than their overall user base, which is a double-edged sword. it's a great opportunity, but it also means that they're not monetizing those users as fast as they are the desktop users,

and they need to really ramp up that mobile monday advertietizm. >> dan, before we let you go, what is the most recent number -- we keep looking at comscore results from a month ago, but is there something that would tell us that it's finding its legs? >> i think there is. there isn't a lot of hard data. the other thing i think is interesting is they're talking more aggressively about monetization. they talked about gifts. mark talked about entering the search business which would double the market opportunity. so they're clearly now focused on revenues, whereas before, i don't think so they were as focused on revenues. mark said in his ipo letter, i don't wake up every day thinking about how to make money. now he's talking about doing that every single day. i think that's interesting. but i think the other thing is to keep in mind for an investor is this will take a year, maybe more, maybe a little bit less before we really see it hitting the income statements. i don't think that investors should be looking for an

immediate reacceleration of revenues. i think that's the thing to watch out for. >> dan, thanks for your time, and julia, thanks. we'll have much more of the exclusive ber view with mark zucker beberg later on this morning. the dow up 92 points, 13,586. volume is pretty robust. given that hp is down 4% and is the biggest drag, in fact, on the dow, you've got banks leading the way. everyone's pointing to the claims number today. eh. what's left? maybe the results of the debate last night. >> yeah, exactly. >> is this, in fact, the romney rally? >> the status quo, if you've got the fed printing money, the market will move higher. that's your neutral position, that you would expect the market to continue to make gains. if you got bat dad that, that will still mean that the fed will continue to print money further down the line. >> interesting, if you believe romney's going to win, then bernanke loses his job. you would ostensibly think is

market negative, but not the case, at least right now. you can't go to a conference in texas and not talk about nerner energy. oil, gas, coal, alternatives all on the table in last night's debate, but we'll find out where the big money is really going. well, if it isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers.

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the ecb leaving its benchmark interest rate unchanged at 0.75%. mario dragi speaking at the monthly news conference today in slovenia. silvia is there. did we get any clue, silvia, about where we might be on spain asking for a bailout? >> reporter: well, in a nutshell, no. we had a lot of questions fieldfield ed in that direction like it depends and it's up to politicians and we have to wait for preconditions to be met. what we heard from draghi was the program is ready to go to as soon as the prerequisites are in place. the prerequisites are conditionality, as they always say, meaning there has to be a

bailout, whether this is just enhanced credit line, whether that is a full-fledged bailout, but they're always talking about memorandum of understanding that a government has to sign with the euro group. from then it can basically ask funds from the esm, then the esm can buy in the primary market, and then the ecb can buy in the secondary market. now, all that doesn't sound as if it's going to happen overnight because we know very well that on the other side of the fence, lajoy is still saying we don't need a bailout. the spanish government knows they need some kind of funds, but they're trying to avoid something that's called bailout, and they're trying to avoid something that has a troika and the imf on board. whether or not they come up with some kind of bailout light that circumvents these little land mines remains to be seen. at the moment, we stand where we stood about a month ago. the ecb has rolled the ball into

the court of politicians saying you come up with the reforms. you come up with a bailout plea. you get the esm on track, which should happen, of course, next week in luxembourg at the finance ministers meeting. and after that, we can talk about omt, but we are ready to act. >> all right. silvia, thanks so much, with a nice summation of what's going on in europe this morning. let's get inventory numbers from sharon at the nymex with crude down a dollar. what about nat gas, sharon? >> reporter: natural gas is sliding and we are looking at an inventory report that may be a surprise for some on the street, an increase of 77 billion cubic feet for natural gas and storage over the past week. the consensus was for an increase of somewhere between 70 and 74 billion cubic feet. keep in mind, it's still far less than the five-year average. but the fact that it is a little bit more of an increase than storage levels than expected is part of the reason we're looking at natural gas prices slightly

lower right now. keep in mind as well we saw natural gas $3.50 this week, gaining about 50 cents in a week. we've seen a little pullback even before the number came out. i'm joined by john woods who is a veteran trader of natural gas here on the nymex floor. and john, it has been an incredible run for natural gas over the last week. what was the key driver in the rally and now in the pullback that we're seeing? >> what we're looking at now is the funds came in and started buying this in the low 3s. then you had a weather report that basically gave news to this market. it was void of any type of news. came out a little bullish, gave it more momentum and that's what you had, a nice technical move on the way up. we stopped where we had to, around the $3.55 level and regressed from there. this number basically reinforces the fact we still have a lot of gas out there. >> reporter: we still have a lot of gas out there, but we got a report this week from morgan stanley. there are others saying we could see natural gas at $4.50, that's the next key resistance level going into the 2013 contracts. are you bullish natural gas to that level despite all the natural gas we have out there?

>> well, i'm a short-term bull on this. i think you will get there, but, you know, that will be in january. midwinter. you're essentially looking at a 70 cent rally. that's about it on that market. >> reporter: simon? >> while we've got you, can i ask about oil? >> sure. >> i don't understand why we're getting such heavy falls on crude as we had yesterday. doesn't oil now become one of the great wild cards? it's almost like a coiled spring, potentially subject to a short covering rally like you've had in natural gas. >> right. >> that could really knock the central bankers. why is oil at this level, and will it spring back and stair us all? >> i think it will spring back. what happened with oil, you started to see the bulls come in. they started buying it. and then you had the u.n. meeting. you had a lot of confrontation between netanyahu and iranians. that added to the fire. once that subsided, there was no follow-through. you saw a lot of profit taking in this market. it was really more of a technical move down coupled with, like i said, profit taking. from here, we'll probably get

right back up again. i wouldn't be surprised to see $92, $93 by actually monday. >> reporter: simon? >> okay. good. sharon, john, thank you very much for the view there from the new york mercantile. and the push for energy independent taking center stage last night. but is the race to unlock america's new oil and gas reserves more sound and fury than actual performance? faber's got an exclusive with the co-faunder and president of quantum just ahead. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours. plus, it reduces copd flare-ups. spiriva is the only once-daily inhaled copd maintenance treatment that does both. spiriva handihaler tiotropium bromide inhalation powder does not replace fast-acting inhalers for sudden symptoms. tell your doctor if you have kidney problems, glaucoma,

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let's get another check on the markets. we're looking at the dow up 82. s&p's up almost 10. art cashin joins us here at post 9. and we're discussing off camera, art, what's responsible for the rally given that jobless claims were sort of mediocre and hp is a drag today. >> yeah, we got a little help from europe again. simon's friends got the euro a little stronger and the dollar index is down. that got us off to a reasonably good start. a lot of people trying to pin it to the debate, but i'm not quite sure that that had much of an influence. i think it's still europe driving the bus. draghi's comments also seemed to help out a little bit. and we got up above 50 or so on the dow. and then i think we punched through some small resistance. since the highs of the day,

we've stopped short of the next little resistance level. 1464, 1466 in the s&p. >> you write this morning about what happened to kraft yesterday. we talked about the erroneous trades. any lingering effect on markets overall from that episode? >> no real lingering effects, but, you know, everybody's got that phantom footstep that they keep hearing. as i wrote in the comments this morning, one of the experts came on tv and said, well, it wasn't all bad. the first two seconds went very well. i mean, i thought he was a product manager for acme manufacturing and wile e. coyote was after him. >> harsh. >> it went down to thinking the first two seconds and everything comes apart, that's not going to reassure the public very much. and i think that's the aftereffect of it. people want to see some of this stuff under better control. >> you know, art, i didn't buy either the explanation of today's market bounce was because of romney. you take a look at the euro and it's up 0.6%. and that's all you need. but i do believe that the market

would prefer one candidate over the other. and i'm wondering what you think the conventional wisdom is on the trading floor these days, whether romney would be better or obama would be better? >> well, there's a second part to that. as i've said before, people say, well, if they're worried about obama, why is the market at or near a high -- of course, the fed having an influence, but i think the idea is that whoever's going to get elected, will they have control of the two houses of congress? because you may or may not be able to get anything done. you can get gridlock or at least you'll have to go to compromise. one candidate or the other is not necessarily the pure standout. you've got to figure out where the house and the senate go, too. >> it's also complicated presumably by the fact that the market rally is driven by, as you point out, defensive sectors. consumer staples and health care, at all-time highs today. when the market rises, it's not necessarily a cyclically bullish

market. >> no. it's rather defensive, as you say. the fed is out there, they basically said you'd better get into some risk assets, all right? we're going to keep interest rates at zero. you're not going to be making any money there. so it's almost like holding your nose and going in to buy them. and if you're going to buy them and you don't fully believe in it, then you're going to buy the defensive issues. >> art, thanks a lot. into the mix, september same-store sales came through, showing americans have just slowed down the increase in their spending. for those reporting limited brands and costco came through better than many in the market hoped for. and target and macy's boast missed. chuck grum is senior analyst with deutsche bank, and he joins us to chat through some of the issues. good morning to you. in essence, you felt that the bar was low coming into the reporting on the september figures. >> yeah, i think the buy side didn't really have high expectations coming into this morning. i think throughout the month,

there was a lot of channel checks around, that that business had slowed. and that's really a function of tougher compares from a year ago, the weather not being as accommodating as it was last year for names like target and kohl's, you had pretty big product launches last year that both companies had a cycle. so i think you're seeing the reaction in the stocks today. kind of like we thought, we thought people would buy some of the numbers today which on the margin were kind of in line with expectations. >> you must be disappointed with kohl's in particular because you said that they and costco had, as far as you were concerned, had the best returns, and actually a lot of the negative sentiment on kohl's was factored in and the stock's fallen off his lows. >> yeah, i think you look at the kohl's number, it's hard to look at that positively, down 2.7%. we just got off the phone with management. we found out weeks one and five were the better weeks. the aforementioned j. lo launch, certainly the toughest

comparison in the group. so yeah, i think you look at the stock down 1% to 2%, that's not too bad considering the comp they delivered this morning. we're optimistic. as you get through october and into the fourth quarter, they've got easy compares. and on costco, it's hard to complain about a 4% comp. they continue to deliver. i think you need to own some winners and some laggards. >> but with october, the setup, as you point out, being a bit mixed, chuck, at what point do you think is a good time for investors to get in if you want to buy for the holiday season? >> i think october's got some positives. i think the weather's going to be a little bit more accommodating than it was in september. the comparisons ease a few hundred basis points. we are a little bit concerned that as you get to the end of the month, some of that election could be a distraction to the consumer. so i think before we get -- we buy more of these names, we want to get through the october period. we think the setup for the fourth quarter is encouraged. there's a couple extra days between thanksgiving and christmas which will help out

shopping. in my view, regardless of who gets the presidential nod, consumers want to know who is going to be in that seat. and we think the setup into the holidays will be encouraging. if you look at the back-to-school to holiday correlations, you're looking at a 3% to 4% comp in the fourth quarter. >> good to see you. chuck grom from deutsche bank. we should notice office depot up over 5%. >> new intraday on google as well. >> 767.81 is the new high here, and that would be a 52-week high if we do close at this level. it is higher by $4 or 0.5%. now managed to clinch that new intraday high. >> good day to be long google, short hpq. romney and obama talking about different paths towards energy independent. david faber's got an exclusive interview with ceo from that

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♪ stars at night are big and bright ♪ ♪ deep in the heart of texas ♪ the prairie sky is wide and high ♪ ♪ deep in the heart of texas >> reporter: welcome back to "squawk on the street." i'm david faber at the barefoot ranch in larue, texas. i'm joined by founding partner of quantum energy partners. invests in energy plays. you know, will, yesterday you gave a compelling and interesting presentation entitled "the u.s., the saudi arabia of natural gas." i may have garbled that, but i got the basic idea. are we really the saudi arabia of natural gas right here? >> well, you know, clearly, what we've had over the five to seven years, we've had a huge renaissance in technology being deployed to unlock vast amounts of shale gas in this country.

>> fracking. >> fracking. fracking and horizontal drilling. you know, estimates vary widely, but somewhere between probably, you know, 500 and 1500 tcf of reserves through these shale gas reserves. >> put that in perspective for me. >> if you think about it, 600 tcf of gas is equal to 100 billion barrel equivalent of oil. let's say we have 1200 tcf of gas we found, that's equivalent to a couple hundred billion barrels which is similar to the saudis' oil reserves. that's why we think of the united states really is the saudi arabia of natural gas. >> you know, my colleague, jim cramer, talks a lot about this. of course, we hear energy independence, that also has to deal with oil and what we're doing in terms of fracking, some of the same vast resources in terms of the shale. what are the plays? what are the ways to actually go about getting exposure to this, you know, whether it's on the way up or on the way down? >> right. there's about five or six large

plays going on right now in the united states for gas. you know, the first one was shale not too far from here in dallas ft. worth. you've got the barnett shale, hanesville shail, louisiana, eaglesford, south texas and the biggest largest new play is the marcellus shale in pennsylvania, west virginia and new york. and that's probably the largest shale play of them all. if you think about it in terms of size, you can fit most of the other shale plays geographically inside of the marcellus. that's how big it is. so, you know, there's lots of ways you can get exposure, obviously through public companies have spent tens of billions kwcquiring acreage. >> price is coming down. we've talked about chesapeake. they're not producing as much as they were because of that significant incline, although we've had a nice rally in natural gas. >> if you think of a half cycle of economics meaning dollars forward.

they've already sunk money in the land and seismic overhead. going forward, most of these plays still take something north of $3.50 prices to be economic. and so, you know, where gas prices are today, while there's a lot of natural gas being produced, you know, our big concern is is there's not enough of an economic incentive to continue to have companies drill just for natural gas. you've seen the gas rig count in our country drop from 1250, 1300 rigs. but gas production is still up. and the reason is because there's been a huge -- all the rigs have shifted over. and the issue is there's a lot of natural gas, associated natural gas, that's being produced with these liquids-rich plays. >> you're still getting gas. >> you're still getting a lot of gas. that's what people have a hard time comprehending. the reason is because of this massive amount of oil and

liquids or in drilling it's producing huge amounts of natural gas with it. >> where do you think we'll go with the price of natural gas since it seems to be so important to the drill count and so forth forth? >> right. you know, i think longer term, i think natural gas has to be north of, you know, four -- internal we think of it as a $4 and $5.50 commodity. that's a price high enough to induce the companies to expend the capital, develop the resources, but it's not so high to overstimulate the dwelling. >> there's been some talk about exporting natural gas. do you think that's going to come to pass? >> there's a company that's got a permit. years ago they were trying to import it. you know, thirn i think we look, it's going to be a political question. clearly there's a lot of gas here. just from an oil and gas company

perspective, i think it makes sense to export it. but from a political and quite frankly a national standpoint, you know, if we start exporting that natural gas, it's actually going to cause prices to increase, and i think that's bad politically. it's going to send jobs overseas instead of brings jobs here. the biggest competitive advantage america has today is cheap energy, and so why would we want to export that cheap energy? we can bring back a lot of manufacturing and industry. >> and keep the price of heating your home up. >> yeah. and for the people, the people who are going to cast their votes each november, they don't want high energy prices. >> we've got to leave it there. thanks so much. this is it from me. i'll see you tomorrow. >> thank you very much. up ahead, we're a particularly bullish america. that's from arme sorenson. we have an exclusive interview

in the next hour of "squawk on the street".

facebook has reached 1 million active owners.

"today's" host matt lauer had a chance to interview mark zuckerberg. here's a look at the interview. >> they say this is not only the visionary and the technical guy, this is the ceo. i was reading the article. they said this is like the guy who's learning as he goes. it's like you're learning how to fly and they're in the cockpit. how do you feel about that? >> i take the responsibility extremely seriously. and our responsibility as a company is just to do the best that we can and build the best product for people. and if we build the best products, then i think that we can leading in the space for a long time. that's what we need to stay focused on. >> will it happen naturally. you built the product. can the company make money? i'm not a tech guy and i'm not a business guy but the question i hear over and over again, if a company has a billion customers, how can they not be killing it

if they're making money. >> i guess we ooh killing it, we are making billions of dollars. we're a public company now, so i can talk about it. the future is going to be mobile. >> have you been slow to get there? are you playing catch-up in the mobile area? >> we have the most me beal apps. there are 5 billion people that have phones. we should be able to use many more people. >> zuckerberg might seem overly careful with his words but that's because he knows company is eight a critical crosswords. >> i'm not giving you any news you don't know but it's been a tough several months? what is morale look. a lot of people came here thinking one thing is going to happen and it changed. >> we're obviously in a tough cycle now where that doesn't help morale. at the same time, people are focused on the things that they're building. >> you don't do a lot of interviews. >> uh-huh. >> yet you did one not long ago

at techcrunch and apparently it was pretty successful because the next day the stock was up by 7% or so. did you think i've got to get out there and do it more afternoon? i'm going to do "dancing with the stars" or a reality show? >> my style is i only want to go out when i've got something to say. a lot of people like being in the press all the time. that's just not us. >> you can catch the entire hour tonight on "rock center" with brian williams. a lot more "squawk on the street" after the break. which can withstand over three and a half tons. small in size. big on safety. and those well grounded. for what's around this corner... and the next. there's cash flow options from pnc. solutions to help businesses like yours

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all right. fast money tonight at 5:00, what's coming up. >> ceo of haine and a branding group about mondalese. >> she said with a straight face. we'll see you tonight. in the meantime if you're just joining us, here's what you missed earlier on. welcome to hour three of "squawk on the street." here's what's happening so far. facebook announcing that it now has 1 billion monthly active users and 600 million mobile users. >> pcb leaving rates unchanged.

>> we have felt at starbucks we can't wait for government solutions, we can't wait for the political people in power to do the right thing because unfortunately we're facing a situation where there's so much polarization, and businesses have to step up and do their share. i'm confident that 2013 will be the bottom of the turnaround and then you can look forward, i think, to good growth in 20 14 and 2015. and the opening bell. do you think we're in a recession? >> i do. i don't think all parts of the united states are, but i think we're incredibly close to that. i think the numbers are not actually accurate by the government. what he says is growth will give you revenue which will give you growth and what he's saying is i'll grow the economy and that will produce the revenue and that will give you more growth. the reality is his proposals which are to cut are recessionary. they'll drive the economy the wrong way.

if we have, let's say, 1,200 tcf of gas that we found in the shale plates, that's equivalent to a couple billion barrels which is equivalent to saudi arabia. that's why we think the united states is really the saudi arabia of natural gas. good thursday morning. we're live here at post 9 of the new york stock exchange with a which ek of the markets on this thursday. dow looking at its best rally in about three weeks. up 87 points. no real big surprises. s&p's up almost 1,460. and nasdaq up. for 2013 yesterday, i should say. hpc, meg whitman on the show earlier with us. she thinks 2013 will be the bottom and investors can expect growth in the next two years. u.s. coal exports are headed

for a record year and mitt romney making posz tirch comments about the economy in the debate last night. speaking of the debate, president obama and mitt romney going head to head on everything. we're going to talk with dan bartlett. communications director for george w. bush. plus the ceo of marriott, the state of the hotel industry and a lot more. then wall street usually sees mitt romney as its add foye cat but the governor painted somewhat of a different picture last night. we're going to finding out bhie banks should be wary of a romney win. and mark zuckerberg speaking out. all that and more is coming up in the next hour. but we'll start with the markets. bob pisani with a check on the floor on what's moving. >> take a look at the s&p 500, carl.

it started positive. august factory goods orders were a little better than expected. aircraft also better. you see that move up 10:00 eastern time. take a look at the s&p one month. we're within shouting distance. 1465 is where the s&p has to close to hit the new 4 1/2-year high. carl, it's tough to gauge the debates but one area is very clear. that's health care. many believe that obama care was positive for hospitals and potentially negative for hmos. i'll get into the reason why at 8:30. take a look at hm o stocks, again, on the downside. we'll look at that at 11:30 eastern time. back to you. >> thanks a lot. as you might know, mitt romney played offense on the economy. joining us this morning for some debate reaction is dan bartman.

served in several high-ranking positions during the last bush administration including director and counselor. dan, always good to talk with you. good morning. >> hey, carl. how are you? >> i'm good. i want you to speak to some of the concerns of the democrat this morning. you've been in the position of having to prep an incumbent. what the president did last night. is this intentional? was this some kind of rope-a-dope has people have speculated or -- >> you're right. they're very different challenges you face. what we saw last night was something we faced, frankly, in 2004, that a president has spent four years with everybody walking in the door saying, wow, you look great today, mr. president, and now they're in a situation where they're in the ring and they're getting hit. the best metaphor for that is when you see the football teams

practice and the quarterback has a red jersey on and says, you can't hit him. well, barack obama hasn't been hit in four years and he got hit last night. >> you're not saying when romney says maybe i need a new accountant, you don't think it's playing cards close to the vest, saving it, trying to run out the clock, this wasn't intentional? >> there is the point, hey, giev the lead, i don't want to make a mistake but they say the best defense is a good offense. you started with talking about offense. you're either on offense or defense, and last night barack obama was on defense. i was shocked we didn't hear about the 47%, they didn't hammer home the themes. he was searching at times for criticism on romney. romney kept him on the ropes.

so issue after issue it was mitt romney on offense and the president on defense. >> try to dry some parallels, dan, to that debate between president bush and john kerry. kerry was largely seen at the time to have won at least debate number one. of course, we all know what eventually happened in that race. how much does last night move the polls, do you think? >> it will be interesting to see if it moves the polls. equally important, the psychology, fund-raising, all those aspects between now and -- re remember, this is not going well for him. next week will be the vice-presidential debate in which i think paul ryan will do quite well against joe biden. you could have the situation where they wrap up two debate victories before he gets back on the field. so whether the poll numbers move or not, we'll wait to see, buttal all the other elements you want to see. having the narrative go your way

and the grasset reus and your troops be energized. this couldn't have come at a better moment for mitt romney. >> there's been some discussion. the democrats trying to push, the twitter hash tag #testymitt the way he moved around jim lehler. once you take a punch right in the jaurks it takes them some time to get their legs. i expect barack obama to come back in two weeks and be far more effective. but the spin from the democrats, i've got to admit, has been pretty weak. >> if you are in charge of prep for them over the next two weeks, how would you alter strategy, if at all? >> well, the for matt is an interesting one that should play to barack obama's strength.

it's a town hall format. you'll see a far more aggressive president and he'll try to put him on defense. the question, really, is it's got to be on issues of foreign policy and areas where he might get to do that. so interesting time for the president. and like i said, the hardest part about this and out of all the element os testify campaign, debates are the worst. it parolizes the campaign. it seizes up, particularly if you come out of the gate and do not have a good performance. it puts all the pressure on the president, puts pressure on the staff. so the next two weeks, not going to be fun in the obama camp but i would expect a sharper more offensive-minded debate. >> as you point out, you're dealing with an area where the headlines have not gone their way in the past month. dan, i loved having you on. we'll see you next time. >> good to see you. >> dan bartlett joining us from

atlantic. ga gary cokaminsky. >> i'm here in the control room. i was watching like much of the viewers. meg whitman joined. a lot of people wondering why is the slot down again today? let me tell you. every time a ceo comes on the air there's anticipation that the ceo is going to say something to at least stop the selling. i'm going to explain why that was not the case. certainly as you know, miss whitman was really on message. she talked about the employees many times. she talked about all the new products. when she was asked specific success things about the business, she spoke about the great new products. you asked a fantastic question about the board of directors. i don't think she really answer thad question. as you know, this is a board that's been criticized for some time. she focused on the new members,

not the legacy members that are still there. chesapeake, probably the best board. hewlett-packard, probably the worst bode. these are the issues focusing on what if you're going to buy the stock. this is a company that's highly levera leveraged. 20 million a day. she says they're going to have free cash flow. the company is now going to have to avoid acquisitions, given what they've said. they will not be able to make the acquisitions. and most importantly, and this is why the board and the stock is down again today, carl. you will not find true investors, long-term investors who want to invest in a company for a turnaround until the capital allocation is done in a discipline way. why this dividend wasn't cut to

zero, that's the question i would have asked her. i doubt she would have answered me, but that's the question i would have wanted to ask today. >> that's a good one too. there was a question about the board. some would argue any board member involved in the actions of the past four or five years should be gone. >> in answer to your question, it should be we replaced e'er board member thfrmt is a completely new board as opposed to saying, well, we got half a new board, because, again, you look at what happened today and the dividend given the changes in the outlook, the new plan they've laid out, this plan should be at zero. this should not be a dividend pay. jim also asked a question. if you go back to friday night, it was a shock announcement. i remember it very clearly when he said he was resigning from the company. i said this stock should be sold because it was a cold stock owned by all these people. that's been the case. by the way, every sale since that night has been a good sale.

this is a company that you will not see the value investors coming in until they see radical change and we didn't see radical chachlk today. >> gary in the control room, dangerous as alls. let's get to chicago and rick santelli, hey, rick. >> hi, carl. we're going to hit a couple of topics. hey, everybody out there have their garmin or their tom tom or navigation on their vehicle? what happens when you make a wrong turn? recalculate, recalculate, recalculate. that explains europe and i'll tell you why because it's now become gaming of chicken, between deterioration versus stabilization. what do i mean? well, obviously mario draghi and the july 26 ba zoo is ka and chapter 2 today is he's going to stabilize the financial cost and

destabilize the interest rates, but that isn't going to fix it. the deterioration is while all this is going on, europe's economy is deteriorating so, there's your recalculate. all the data points that are for the reform programs or ratios of debt, recalculate, recalculate. you get in on this spiral. i don't like to weigh in on the politics. i like to weigh in on my domain in terms of what i cover, the markets, interest rates last. night. what was the spin of the debate? i didn't think there was a lot of spin. i'll tell you why. social media. i'll tell you what. i switched to every channel. i have tvs that have picture in picture. i was watching everything. listen, we all know, the media likes president obama. but what was the arbiter there was asser channel's numbers on who won the debate, 65-30, 70-30, they had to go long with

their audience. that was the great leveler. we saw howard dean, barack obama, people use internet for social and political purpose ts. i never thought twitter would end up being the arbiter of last night's debate, but in my opinion they were. carl, back to you. >> good point, rick. i can't say i argue with you too much. marriott international gives investors a good look at how the hotel industry weathered the first summer, giving the stock a boost tard, today 6789d ceo's going to join us, arne sorenson in an exclusive yet. but before we go to break, here's a look at marriott's five most expensive suite. there's a business suite at the zurich marriott in swids, the essex house in new york, a premium suite in london. >> a villa at the scrub island resort in the bvi, that would be

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save up to 35% and get 3 years interest-free financing on tempur-pedic. but hurry, sleep train's inventory clearance sale ends columbus day. ♪ your ticket to a better night's sleep ♪ simon's back with a look at travel & leisure. >> they're beating estimates. sharets of marriott up more than 30%, certainly more than 30%,

35% now, although they're off their highs for the session. joining me now for a cnbc excusive, mr. arne sorenson. welcome to the program. nice to see you. >> thank you. good to see you too. >> one of the main messages that comes out of the earnings report is that you're particularly bullish on north america, where, of course, 75% of your business still exits. >> yeah, that right. in north america, we've got building demand from corporate travelers, from group business and from leisure travelers and we've got really low supply. you combine those two things and you've got continued growth in same store sales and you see increasingly that's shifting toward rate growth versus occupancy growth. >> but how do you -- >> not withstanding all the anxiety -- go ahead.

>> i didn't mean to interrupt you. in the next few weeks you're going to try to lock down the rates. the occupancy has looked a little soft yesterday and the per deems from the government which are 5% of your business are also not helping at the moment. what sort of rates do you think you'll be able to strike for 2013? >> well, we think most of our corporate accounts, the rates should be up in the high single digits. now, part of that, to be fair, is going to be a mixed shift. so some of our lower corporate accounts we probably will get rid of and move increasingly toward the higher priced accounts. it won't surprise anybody that the government is trying to cut some costs. one of the things they did just a month ago is they were going to hold the rates flat, that they authorize their government travelers to pay when they stay in hotels. it will be interesting to see what the cons kwens are. sometimes it means the government travellers will have to stay farther out of the city center because they won't find

rooms available at the rates they're authorized to play, but that will vary market by market. i think ultimately the business and the vacationers will drive the rates in the next year. we talk about 5% to 7% next year, which is a pretty bullish number. >> as far as the headlines are concerned, you beat by four cents. is it fair to say that actually that's not due to demand and pricing. it's more to do with the fact that you've cut costs by $23 million more than you expected is and you brought more than expected which flants your eps figure. >> yes. i think the earnings report we reported today compared to what people were expecting was mortgagely driven by unusual or one-time items, admin costs, those sorts of things. our same-store sales numbers were less than expected an our fees were more or less than what

was expected. so that's a fair comment. we posted really good growth, so we feel good about that. >> in the meantime you're also maintained your midpoint. you are tightening the range and lowering the top of that guidant. how bad is the overcapacity? international, presumably is your problem. >> right. international is the hardest to predict when it's going to happen. one is they have less group business which gets booked earlier. because it's booked earlier, it gives us more confidence. but the second thing is there are a lot of different stories happening outside the united states today. look at dhie. >> -- china alone. shanghai is building into a beautiful city. it like china is doing extremely well. but when you go to the southern part of china to look at marxes

line senn zheng and gwang hoe, it should come no surprise to anybody there are fewer exports to europe than there were a year ago and so i think we're probably seeing relative weak ps in those parts of china. as we look -- you roll all those numbers today. they're still growing in the 7% to 10% range. it's still pretty good. we hope in hindsight that means we're a bit conservative but we think the right thing do is watch that market which seems to be slowing a little bit and not necessarily count on it. >> that's interesting. this is carl. i hope you'll allow me one campaign. what's the most level-headed thing you can say about his performance and how it alters the trajectory of the race? >> i thought it was a fascinating debate last night

and i'm not here to endorse either candidate, but obviously governor romney came out very quickly and said to president obama, whatever you might think my tax cut and plan is irrelevant, hire's what i'm going to do, and what he described was much more moderate sounding than clearly president obama was counting on attacking him for, and it looked like president obama as a consequence didn't quite know where next to take his argument. thank i were both -- in many respect thiers both great communicators, they're both obviously smart men, and they were there to say something about their possessions. if i have a little bit of disappointment, i guess, about the debate, even though we've got this fiscal cliff issue coming up at the end of this year, which is really important not just to business but to the economy broadly, there was very little conversation about either of those candidates would address the fiscal cliff and i'm hope pful in one of the next

debates we could start that process. we've got to get the ball rolling if we're going to avoid the issue. >> arguably it might scare the middle ground that they're after those swing voters. arne, thanks for joining us. as we said, midtt romney, actually accused the president of being too soft on big banks. should wall street be careful what it wishes for? back after a break. if we want to improve our schools... ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows...

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the european markets are closing now. and it's a flat to negative close on another uneventful session in europe. the wait and see continues. when will europe ask for the bailout. when will the ecb stop buying the bailout bonds. meanwhile mario draghi had his full bazooka out at the news conference. he said significant progress has been made in spain but significant challenges remain. in the meantime, with the breathing room he has given the politicians around europe, they continue to feast upon that in

terms of selling the bonds and raising cash at cheaper interest rate. as a matter of fact, the markets were at a good sale. let's look at the yields for that. you'll be aware in the general terms since draghi last took to the public arena, they'll have this big buying of bonds down the line when europe asked for help, that actually the yields have been rising during the course of that period. okay. we're slightly lower where things stand at the moment. obviously that's not the case. you've seen a similar patent on the three-year. let's have a look at those as well. meantime as we look at the ten-year, it's interesting to note that the spanish today started their road show on investors for their bad bank in london. so 5.91 is where we are on the ten-year at the moment. at this level, of course, the stocks are flat but you had this huge march higher than draghi

said two months ago he'd do whatever he could. deutsche bank was comparing this to the sugar rush after we had the ltro money coming through and you have to completely disconnect it and they ask how long can that be sustained for. and then in athens today it was quite clear there are sight problems in europe. back to you. >> all right, simon. thanks to you. we are getting some headlines regarding names in the telecon sector. >> business week for metropcs. this is the news, carl. the stock was halted wausz of a single stock sirkt breaker. it has resumed trading as you can see. it's up 3.1%. i think it's a little higher. nope, there it is right now. bloomberg is reporting that sprint is considering a counter offer to t-mobile's bid for the

company. ti-mobile offer 1g billion to metropcs. so that's given a boost to its shares. back to you. >> not too much clarity on their mulling theed by but something to watch. let's get to rick santelli in chicago, one of the great teams, bianco santelli. rick, take it away. >> i feel the sake about you and jim bianco, that's for sure. >> that really is the topic because jim sent me some interesting material. you know, the effects of europe slipping into recession or already being in recession isn't the 8%. it's much bigger than that. give us some data. >> it starts with the financial sector. 20% of the banks have as their parent a european bank. some of the largest banks in the country are owned by european banks. hsbc's the tenth largest bank.

deutsche bank would be collectively the sixth largest bank. if you want to go down the list a little further -- now a parent does not mean if you have a problem in europe, the united states has a problem. but if there's a problem in europe, the parent might be less risky or not wants to tag loans. so it's critically important for europe, to the banking system for starter. >> and i totally agree. i think when we frame this issue, we need to frame it on the context that there's a lot more at stake with regard to capital and how capital investment. so what you're really talking about is the parents trickle balance sheet issue. if the parents are tightening their belt, it's hard to thing they're working in a robust fashion. we're in agreement there. >> sure.

>> slet's take it a bit farther. it's ongoing. spain hasn't even asked for bailout, so every day these reforms, the metric change. >> that's true. they do charge and it's been very difficult to try and get ahold of it but that's been the cycle we've seen in europe. when things get bad, everybody promises the sun and stars and what it takes and then they don't want to follow through and that's why in spain is holds up on condition alt. >> that is the word. you know what it would be like? having the olympic weight lifters doing it on sand. that would be the extent of it. the ground is always shifting. it's going to be many years. your thoughts quickly. >> yes, exactly. they know conditionality is important and they're not happy about it. >> no, because they're on the losing end of conditionality. carl, back to you. >> that's a vivid visual.

thanks a lot. i want to bring in bob pisani at post 9. >> 1469 is the closing high. i got excited. we got close. 1463. remember, 1465 closing high would be a new 4 1/2-year high but we tear off of that. the nasdaq has gone negative. a lot of discussion about the debates. governor romney generally doing better than people had anticipated and certainly looking better. here's the important thing. what effect does it have on the stock market. the one you see is on obama care. generally obama care is perceived to be positive for hospitals. that's because more insured people, means fewer uninsured people at hospitals. this is a no-brainer and hospitals have benefitted from the perception that it's going to continue. obama care is considered to be negative for hmos because employers and employees might gravitate to cheaper exchange

programs that are out there. this is a little troeshl yochl u get more people coming in to the health care roles but generally that's been the trend. if you take this and think this is not as likely as people thought because governor romney did well in the united states, flip it around. and see what hospitals. hospitals have been up. take a look at what the hospitals are doing. ire all to the downside. hmos which have not been doing well or outperforming the hospitals recently, take a look at what they've doing today. all the hmos are to the upside. elsewhere it gets a little bit murkier. in energy, obviously all of them are in favor of as much energy development, both of them, as possible. but governor romney made a point saying i like coal. we could see the coal stocks moving to the upside as well. although, what, guys, he's going do or even president clinton would do to to reverse these trends in coal stocks, look at

alpha natural. the big utilities are going to natural gas. what are you going to do to turn around the chinese government, the chinese government to buy more coal, doing know. but today you can see a nice little move up. >> at least in that sector, the cause and effect is a little more clear. thanks, bob. of course, the markets, are they getting a boost after last night. we're joined here at post 9. good to see you as always. what do you make of the argument that this is somehow related to the race for the white house? >> you know, i think investors are looking for any opportunity to buy into the market. we've seen the waves trend higher an higher. there have been cell signal-- s signals. everyone was expecting some resort.

>> is there much hesitancy for investors? >> i think there's still signals to stay in this market. we have a lot. like you said, earnings season, we still have a lot of economic data, jobs numbers coming out tomorrow. investors want to be in this market. i think reason for them to stay in the market, the magnetic effect is still here. >> a couple of weeks ago the journal has said o those who have ridden the rally are going to spend the last quarter on the sidelines counting their riches. the comp has been leading all year long and the nasdaq can't seem to get out of negative territory day after day, it went negative as bob has said. is that telling? >> i think we start to see some of these short-term profit takers taking profits off the table here. let's look at some of the funds. we've tt mark on the whole up 12 to 15%. probably up around 16%. they're going to have to start moving back into this market. i think we're going to see this

effect as we see that that. >> and then we should point out volume today is at least on the heavy side as opposed to the light side. >> it is. the reason to be in the market today. you don't want to miss the opportunity. i think tomorrow, clearly the unemployment number will move our markets. >> got a couple of those before election day. jonathon, thank you so much. john their core pena. richard kudlow is going to talk about what it mean going far. plus big banks might be wary of a romney win in november. we'll talk about that when "squawk on the street" comes right back. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level.

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>> fantastic night. i loved the coverage. you did an amazing job, carl, with maria. i loved how you handled the whole thing with norquist and riesch. let's play a quick soundbike from the actual debate in terms of a question that came up about too big to fail. let's lab to governor romney and what he had to say. >> dodd/frank was passed and it includes within it a number of provisions that i think has some unintended consequences that are harmful to the economy. they're effectively guaranteed by the federal government. this is the biggest kiss that's been given to new york banks i've ever seen. >> now, carl, i think later in that -- later in that conversation, he mentioned five banks. he said there were five big banks that were deemed too big to fail, so i kind of was wondering, which five banks is he referencing.

i had not heard about it as being five specific banks. i did what everybody does. which five banks is he referencing. i think he's referring to these. bank of america, jpmorgan, citigroup, wells fargo and goldman sachs. i asked. there's clearly more than five banks given the living wills and the litmus test for who has to say if they are to fail, what the exit strategy or winddown would be. what i wondered about the debate call is when this came up -- and i guess this would go to those who didn't seem as prepared as they could have been because i was expecting some sort of

rebuttal in the sense that when he threw out the five big banks that were too big to fail, clearly there's many more. so just a quick thing add one thing i listened to, one thing i talked about, more confused, i guess, today than i was last night, because i still don't know how many institutions are protected as a result of dodd frark. >> omissions on the presidentco the president's part is something they'll have to discuss. >> he doesn't know. he doesn't know. there may be 20 banks that are too big to fail. romney is thinking about the top five banks. the fact is they get cheaper money because the government stands behind them. the community banks which are very politically powerful and do some good, by the way. those banks have to pay out moore and it's harder for them to get credit and therefore to lend and so what romney and a

lot of republicans have said all along about dodd/frank is you've create add two or three-tier credit system and it's the little guy that gets screwed. >> we've heard it many times. >> by the way. welcome to post 9. >> thank you, my friend. >> i don't know if you want to toss this to kick it off. >> i don't really have any sound with me. i just want to say quickly a cup of things. for conservative supply side guys like myself, free market guys, mitt romney was a man of principle. he was absolutely steadfast and that was very impressive, particularly regarding tax reform but also market solutions for energy, for health care, maybe for bank reform, things of that. he did a great job. second, he had the facts. he was highly prepared and it looked like president obama was not prepared. and third, maybe most importantly, what mitt romney said is, you know what? i know how to make a deal. i did it in massachusetts with

the democratic legislature. i know how to make a deal. i know how to find common ground without giving up my principles. this was right out of ronald reagan's playbook. when i worked for the gipper -- he used to always tell us. we made deals on taxes and spending and so forth, if i can get 70% of what i want, i'll take it and worry about the 30% later, the other 30%. roomny reminded me of reagan -- romney didn't say i'm giving up, i'm just going to move to the left. he's saying, no, no, no, you couldn't get a deal on simpson-bowles, i can. you never lifted a finger. i can. >> the white house will come back and say the house at least until now has not proven they're open to deals of any kind. >> that may be what they say, but from every account from bob

woodward's book to others, john boehner had a good deal and obama broke it at the last minute with a new $400 billion tax hike. boehner says that, bob woodward says that, all testified says that and that's why i think obama lacks credit. what does romney do for your the a living, they make deals. they make deals. and they're not going to make a bad deal where they lose money. they will give. sometimes you have to give. and i think the public sees that and thinks this is the kind of guy that can save us from bankruptcy. i think that was a subtle, impli implicit but very important part of romney's performance. >> it's a deal that has to get done. >> we have to have flexibility. we know that. >> we'll see you tonight. kudlow report at 7:00 eastern time. what even wit when we come back, a stock

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welcome back to "squawk on the street." i'm mary thompson. we're taking a look at shares of netflix. it's up 5%. this week it's up a very healthy 19%. the reason for this rally we've seen on netflix, we had upgraded citi earlier. the customer satisfaction at the firm appears to be improving. in the course of the wake of the price de-bach o'last year, that's good news to

shareholders. carl, back to you. >> that is a big deal for a name that's been kicked around. thanks a lot, mary. as you might have heard, mark zuckerberg speaking out about their growth. you're going whaer what he told matt lauer in just a few moments. if we want to improve our schools... ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this.

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it's a new milestone for facebook, announcing they have more than a billion users. ceo mark zuckerberg speaking to matt lauer in an exclusive interview. >> if a company has a billion users, how can they not be killing it. >> we're a public company, so i can talk about that, but the future is -- is really going to be about mobile, right, and the opportunities for growth there. >> have you been slow to get there? are you playing catch-up a little bit in the mobile area? >> well, very do have the most user apps. we should be able to serve millions and grow the user base there. >> the company is launching a new ad campaign in conjunction with the milestone. here's a look at their new commercial.

>> chairs. chairs are made so that people can sit down and take a break. anyone can sit on a chair. and if the chair's large enough it can sit down together. and tell jokes or make up stories. >> the ad debuted this morning on facebook's newsroom's website and you might be seeing that on some television channels in the next few weeks. you can catch more on rock center with brian williams at 10:00 p.m. eastern time. a couple names to draw your attention to today. take a close like at pcs today. we got some reports that sprint may be mulling a counter bid as things may again to heat up in the telespace. we saw a spike but it settled down a little bit. it's currently trading down 32 cents at $11.92 and retailers

getting a broad look today. interesting that despite several companies posting good gains for the month, no big surprises to the upside. and as a result, we're seeing some broad weakness among names like kohl's, abercrombie & fitch and ross stores. one thing about kohl's is they've been unable at this point to capitalize some of the weaknesses that are hounding jc penney. that is one of the haggards as hp continues to be the biggest drag on the dow. that does it for us here on cnbc. wapner and the "fast money halftime." >> all right, carl. thanks so much. welcome to halftime. four hours to go. here's where we stand on the street, and a pretty good day it is. the s&p 500 pushing at